U.S. stocks have gained for the third straight day, thanks to top performance from tech companies with the Dow, S&P 500, and Nasdaq posting a two-day win streak. The surge comes despite an unexpected jump in jobless claims.
The Dow rose 25.35 points on Thursday, closing at 34,823.35 with the S&P 500 climbing 0.2% higher and reaching 4,367.48. The tech-heavy Nasdaq Composite led the markets with a 0.3% gain, ending the day at 14,684.60.
Earnings reports for some of the biggest names in tech are expected next week, forcing investors to jump back into their favorite tech stocks. For one thing, amid COVID-19 resurgence and falling interest rates, tech stocks now seem like the best place for investors and traders to gravitate towards.
Rising tech stocks
Salesforce gained 2.5% while Microsoft rose 1.6% after Citi raised its price target. The tech giant’s stock, according to Citi, is poised to rise more than 30% over the next year. Facebook and Amazon climbed 1.4% higher, with Apple rising just 1% after Canaccord Genuity announced that the demand for Apple products was rising faster than the tides.
Some investors, according to CNBC, believe that tech shares will pull back.
“This economy is still in an incredibly strong rebound, corporate revenue and profits are increasing sharply, and it’s a pretty positive backdrop,” said Ron Temple, head of U.S. equities and co-head of multi-asset investing at Lazard Asset Management.
That means if the yield curve steepens, it will pose a real challenge for companies that are driven by growth like tech stocks.
“That’s a negative headwind for those companies, and it’s probably a positive story for the stocks traditionally viewed as more value oriented stocks,” Ron added.
Jobless claims
Earlier in the day, stocks came under pressure after jobless claims suddenly rose to 419,000, higher than the 350,000 economists had estimated.
Also Read: U.S. Markets Close at Lows as Inflation Fears Soar
Following the poor jobs data, the 10-year Treasury yield crashed to 1.265%, a rate that dropped to a 5-month low of 1.17% earlier this week.
Bank stocks also dropped with Wells Fargo, JPMorgan, and Bank of America shedding more than 1% each.
Despite posting a profit for the second quarter, thanks to the recovery in travel demand and government aid, American Airlines shares crashed by 1.1% on Thursday. Southwest Airlines also reported a quarterly profit, but the carrier’s stock closed 3.4% lower.
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Union Pacific’s shares were up more than 1% after the railroad company reported a Q2 net income of $1.8 billion, up from $1.1 billion. CSX skipped almost 3.5% after its second-quarter profit more than doubled, with AT&T shares climbing about 0.4%.
Texas Instruments, however, slid 5.3% after the chipmaker topped analysts’ expectations for Q2.
The market hasn’t seen as much as a 5% pullback since October last year. And while the bull market might be alive now, it’s too early to conclude that the market will remain smooth. For one thing, the months ahead might turn out to be both risky and troublesome.
